Everyone has skin in the game with a FairTax. Even foreign visitors to our nation, whether here legally or not, will contribute to our tax system as they make purchases. People doing illegal activities, or those who are working simply for cash, will contribute as they buy supplies at their local hardware store. Major corporations who prefer the lower 25% European corporate tax rate to the 35% corporate rate in America would suddenly have a much better option here in the United States at 0%.
No one can predict what those companies will do for certain, but wouldn’t it make sense that they would entertain the idea of setting up shop in the United States? Manufacturers could return. Pittsburgh’s steel industry could be revived. There would be more jobs in the United States than people to fill them.
Do you know what that does to wages? Hint: Supply and demand works well for laborers in this situation.
The FairTax also breaks up the vicious cycle of influence between lobby groups and elected officials. Today if a politician wants cash, he asks special interest groups. Those groups fund his campaign, he gets into power, and then he owes them something in return. What he usually owes them is some sort of break in the tax code. If there’s no tax code to peddle, it reduces the incentive for those special interest groups to get involved in their bribery.
The FairTax is not a magic pill to solve all of our problems. It does not address runaway spending. It has nothing to do with whether or not we keep a bloated federal government with 16 cabinet level departments that mostly perform functions beyond the enumerated powers the federal government was granted. The price of goods and services could go up. I say could because this is going to be left up to the free market. If no company wants to pass on the savings gained by no longer having to pay the withholding and payroll taxes, then prices will increase.
Further, although we will bring more jobs to America, it’s possible that people will seek to find alternatives when purchasing goods if there’s a market advantage to doing so. If it’s cheaper for a Maine resident to buy a new Mercedes in Canada rather than in his home state, he may do so. Some say it’s a regressive tax. I tend to disagree.
People who argue the point that the FairTax punishes the poor are not basing their argument on a level playing field, but rather the “progressive” one that we’ve become accustomed to where the majority of taxes are paid by a small minority of the wealthiest Americans. This is a legitimately debatable point, but I simply think that the FairTax is “not as progressive” as what we have currently.
We’ve come a long way in this country from a society that created an outright rebellion over a tiny sales tax on a pound of tea, to one that willingly complies with tens of thousands of pages of tax laws and constant intrusions into our personal and financial lives. The FairTax would be a fundamental shift in power away from the central government, back to the people of the United States. A voluntary system, the FairTax would be more in line with the founders’ views of a free society. That’s part of the reason why Governor Gary Johnson has expressed his support for the FairTax, and one major reason why I’m supporting his candidacy.